...International Marketing Environment Jessica Bell International Marketing (MKT 320) Professor Dr. Johnnie Woodard July 20, 2011 Explain the role of government in international trade, the various levels of economic integration and the impact on international marketing. According to the business dictionary, International trading is the exchange of goods or services along international borders that allows for greater competition and more competitive pricing. The governments’ role on international trade includes restrictions that are placed on businesses, the licensing and other permissions requirements, regulations, formalities, and taxes, all of which have a direct impact on doing business. In international business, the government effects business viability. For instance, international business transactions face more taxes than domestic businesses; they also have quantitative restrictions and licenses’. Governments also impact international businesses by establishing importing and exporting policies. There are other aspects in which governments play an important role in international business like infrastructure, law and order and minimizing risks. Economic integration has been one of the main economic developments affecting world markets since World War II. Economic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place...
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...International Business - Environments and Operations Part One Background For International Business Chapter 1 Globalization and International Business Introduction Globalization is the ongoing process that deepens and broadens the relationships and interdependence among countries. International Business is a mechanism to bring about globalization. (The term sometimes refers to the integration of world economies through the reduction of barriers to the movement of trade, capital, technology, and people. Throughout recorded history, human contacts over ever-wider geographic areas have expanded the variety of available resources, products, services, and markets. Today, so many different components, ingredients, and specialized business activities go into products that we’re often challenged to say exactly where they were made. Example: Japanese firm Matsushita furnishes the CD player in the Korean-manufactured Kia Sorento.) International business consists of all commercial transactions—including sales, investments, and transportation—that take place between two or more countries Increasingly foreign countries are a source of both production and sales for domestic companies (These global activities enable us to get more variety, better quality, or lower prices. Private companies undertake such transactions for profit while governments may undertake them either for profit or for political reasons.) Studying International Business is Important * Most companies are either...
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...Introduction to the Global Economy The Global Economy Globalisation – Refers to the integration between different countries and economies and the increased impact of international influences on all aspects of life and economic activity * No longer are economies dominated by local influences but rather through global influences from another countries and economies due to the impact of globalisation. * The aggregate value of all goods and services produced worldwide each year in the global economy is known as gross world economy * The Great depression in the 1930’s and the world wars are examples of international influences on economies in the twentieth century. This also caused trade barriers to arise * The major indicators of integration between economies include: * International trade in goods and services * International trade flows * International investment flows and transnational corporations * Technology, transport and communication * The movement of workers between countries Globalisation * Barriers have been put up to try and protect businesses * Benefits to removing barriers * Barriers have been removed but there are still some barriers that exist * Some say the EU is closing off itself to other countries * Benefits to globalisation: * Trading – we might not have products that are only overseas * Cheaper labour is overseas * Investment overseas and investment into Australia * Financial flows of...
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...European School of Economics Economics of Business and Finance Lecturer: Rexford Sam Student: Alessandro J. Nigra Date: May 29, 2016 Executive Summary The paper should present and discuss the most relevant old and new trade theories and all its components. Once they are presented, Integration may arise not only as a key concept but as one of the ultimate goals of international trade. Integration should be described and analysed not only theoretically but with the European case as framework. Finally, the conclusion may be presented showing all the benefits and drawbacks of integration. Table of contents Introduction 1 Analysis 2 Conclusion 9 Bibliography 11 Appendix 13 Introduction The aim of this project is to present, characterize, examine and analyse the nature and sense of the European integration. In order to achieve it some of the most important trade theories will be presented. Not only the classic ones but also some of the more recent ones, which will allow the analysis to fundament and give an accurate background to the idea of integration and all its components. The study should be focalized into the old classical trade theories of Absolute and Comparative Advantages, the Heckscher-Ohlin model and its Samuelson variation. Then, some of the newest classical trade theories such as the New Trade theory and the International Product Life Cycle theory will be discussed. Finally, it will be mentioned one new contemporary...
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...END-OF-CHAPTER QUESTIONS QUESTIONS 1. Why is it important to study international financial management? Answer: We are now living in a world where all the major economic functions, i.e., consumption, production, and investment, are highly globalized. It is thus essential for financial managers to fully understand vital international dimensions of financial management. This global shift is in marked contrast to a situation that existed when the authors of this book were learning finance some twenty years ago. At that time, most professors customarily (and safely, to some extent) ignored international aspects of finance. This mode of operation has become untenable since then. 2. How is international financial management different from domestic financial management? Answer: There are three major dimensions that set apart international finance from domestic finance. They are: 1. foreign exchange and political risks, 2. market imperfections, and 3. expanded opportunity set. 3. Discuss the three major trends that have prevailed in international business during the last two decades. Answer: The 1980s brought a rapid integration of international capital and financial markets. Impetus for globalized financial markets initially came from the governments of major countries that had begun to deregulate their foreign exchange and capital markets. The economic integration and globalization that began in the eighties is picking up speed in the...
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...arose to question realism key assumptions of state as main and the only actor of world politics. This theory gave a new analytical framework to understand the international relations which was contrary to the state centric paradigm of realism. With complex interdependence as its central concept, this theoretical analysis advanced “synthesis of liberal + realist perspectives by constructing a way of looking at world politics and also the idea of institutionalism to foster cooperation”. It is asked how under conditions of complex interdependence world politics would be different than under realist conditions means this analysis ask to see “ what realism overlooked”. The phenomenon of Interdependence is not new; states have always been interdependent on each other for their economic functions and especially for security purposes. We have seen the complicated interdependence among states in the alliance system to achieve their political ends before First World War. The earliest example of interdependence comes from Norman Angell’s “The great illusion (1910) when he said the economic interdependence will minimize the occurrence of war on the basis of cost-benefit analysis.” Countries are dependent on each other for trade and transaction, they interact globally e.g. flow of money, goods, people and messages across international boundaries but all transactions among countries are not characterized by interdependence because??? Where there is reciprocal costly effect of transactions, there...
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...Journal of International Economics 76 (2008) 356–370 Contents lists available at ScienceDirect Journal of International Economics j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e c o n b a s e Globalization and the dynamics of cultural identity Jacques Olivier a,b, Mathias Thoenig b,c,d,⁎, Thierry Verdier b,d a b c d HEC Paris, France CEPR, United Kingdom Université de Genève, Switzerland Paris School of Economics, France a r t i c l e i n f o a b s t r a c t This paper presents a simple model where micro-founded dynamics of cultural identity are endogenous and interact with an international trade equilibrium. This process generates a strong home bias under autarky. We then show that goods market integration causes a phenomenon of cultural divergence, whereby the distributions of cultures become more dissimilar across countries and one of the cultures that existed under autarky ultimately disappears. By way of contrast, we show that social integration causes cultural convergence and can counterbalance the effects of goods market integration. © 2008 Elsevier B.V. All rights reserved. Article history: Received 15 March 2006 Received in revised form 1 May 2007 Accepted 23 June 2008 Keywords: Cultural identity Cultural transmission International trade JEL classification: F02 F10 Z10 Z13 1. Introduction Revolutionary developments in information and transport technology are changing the world. Our daily lives are governed by...
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...Structural Change and Economic Dynamics 19 (2008) 315–329 Contents lists available at ScienceDirect Structural Change and Economic Dynamics journal homepage: www.elsevier.com/locate/sced Uncertainty, trade integration and the optimal level of protection in a Ricardian model with a continuum of goods Michele Di Maio ∗ Department of Economic Studies, University of Naples “Parthenope”, via Medina 40, Naples, Italy a r t i c l e i n f o Article history: Received 13 November 2006 Received in revised form 1 April 2008 Accepted 15 July 2008 Available online 3 August 2008 JEL Classification: F01 Keywords: Uncertainty Trade integration Optimal protection Specialization Continuum of goods a b s t r a c t This paper analyzes the effects of increasing trade integration on individual utility when the international specialization pattern is stochastic, i.e. when the range of goods each country produces depends on the realization of a random variable. Using a Ricardian continuum of goods model it is shown that under uncertainty a trade-off emerges. As in the standard deterministic model, higher trade integration reduces prices and increases expected real income. However, higher trade integration, reducing the number of active sectors in the economy, also increases the displacement cost the worker suffers when the sector she is employed into has to close down because, ex-post, the foreign country’s competing sector results to be more efficient. Two...
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...Regional Trade Agreements Caroline Freund Emanuel Ornelas Public Disclosure Authorized Public Disclosure Authorized The World Bank Development Research Group Trade and Integration Team May 2010 Policy Research Working Paper 5314 Abstract This paper reviews the theoretical and empirical literature on regionalism. The formation of regional trade agreements has been, by far, the most popular form of reciprocal trade liberalization in the past 15 years. The discriminatory character of these agreements has raised three main concerns: that trade diversion would be rampant, because special interest groups would induce governments to form the most distortionary agreements; that broader external trade liberalization would stall or reverse; and that multilateralism could be undermined. Theoretically, all of these concerns are legitimate, although there are also several theoretical arguments that oppose them. Empirically, neither widespread trade diversion nor stalled external liberalization has materialized, while the undermining of multilateralism has not been properly tested. There are also several aspects of regionalism that have received too little attention from researchers, but which are central to understanding its causes and consequences. This paper—a product of the Trade and Integration Team, Development Research Group—is part of a larger effort in the department to understand how regional trade agreements are affecting trade patterns and external trade liberalization...
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...Free Trade Area At the lowest level there is the preferential trade area, this means that the members charge each other lower tariffs than those applicable to non-members; however there is no free movement of goods within the area. A free trade area means that the barriers and quotas to mutual trade are removed. For instance, the members of the North American Free Trade Area (NAFTA), Canada, Mexico and the United States, pledge to do away with the barriers to mutual trade. Unlike a customs union, each member continues to determine its own commercial relations with non-members. Other examples of free trade area are the ones between Mexico and the EU; between Canada and Chile; between the US and Jordan; FREE TRADE AREA This is the preferred option for countries embarking on economic integration and for those unwilling or unable to engage in higher levels of integration. An FTA can be limited to particular sectors, thus retaining a high level of control at the national level and preventing exposure to competition for the other sectors. The authority to decide how third countries are to be treated remains unaffected (independent trade policy) in an FTA. However, rules of origin (ROO) have to be agreed upon among members so as to determine which products can be transferred duty-free. In the case of NAFTA a product has to have been substantially transformed so that a change in tariff classification has occurred, or it must have 50% (62.5% for cars) member-country content...
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...The East Asia’ Regional Economic Integration Tutor: Griffith, Edward Student ID: 20647046 Student Name: Hong Xu (Eric) Word Count: 2369 Date of Submission: 18/1/2016 The East Asia’ Regional Economic Integration In the past twenty years, the East Asian economies realized the freedom of foreign trade and direct investment (FDI) because of the influence of GATT/WTO and APEC and as a result, it further promotes the economic growth of East Asia. The mutual economic dependence of each countries has increased a lot and therefore, close economic cooperation among Asian countries is necessary for healthy economic development. Many countries try to deepen their cooperation by establishing agreement and carrying out negotiation or discussion (Kawai 2004). Besides, the East Asian countries want to have their own institutions where they have vital voice in decision making after the financial crisis. As a consequence, the regional economic integration become an inevitable trend. The structure of this essay is organized as follows. The first part of this essay will discuss the driving forces of...
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...operational facilities from the ground up. In addition to building new facilities, most parent companies also create new long-term jobs in the foreign country by hiring new employees. 3. Acquisitions and Merger A general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed. 4. Gross fixed capital formation Includes spending on land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; the construction of roads, railways, private residential dwellings, and commercial and industrial buildings. 5. Exporting In International Trade, "exports" refers to selling goods and services produced in the home country to other markets. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. 6. Licensing A business arrangement in which one company gives another company permission to manufacture its product for a specified payment. 7. Internalization theory Explains the existence and functioning of the multinational enterprise. It contributes to understanding the boundaries of the MNE (Multinational Enterprise), its...
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...Chapter EIGHT CROSS-NATIONAL COOPERATION AND AGREEMENTS OBJECTIVES • To profile the World Trade Organization • To discuss the pros and cons of global, bilateral, and regional integration • To describe the static and dynamic effects and the trade creation and diversion effects of bilateral and regional economic integration • To define different forms of regional economic integration • To present different regional trading groups, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), and Asia-Pacific Economic Cooperation (APEC) • To describe the rationale for and success of commodity agreements Chapter Overview Regional economic integration represents a relatively new phenomenon in the history of world trade and investment. Chapter Eight first examines the roles of the General Agreement on Tariffs and Trade and the World Trade Organization in determining the ground rules of the world trade environment. It then introduces the basic types of economic integration and explores the potential effects of the process. Next it examines in detail both the European Union (its structure and its operations) and the North American Free Trade Agreement and briefly describes a variety of other regional economic groups. The chapter concludes with a discussion of various commodity agreements and producer alliances, including the Organization for Petroleum Exporting Countries. Chapter Outline OPENING CASE: TOYOTA IN EUROPE Known for...
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...or transnational company (TNC). MNC as beauty - Potential contribution to economic growth and national welfare. - Important agent of change. - Increases competitive pressures on domestic firms. - Demonstrates and diffuses new technology. - Upgrades the quality of indigenous resources and capabilities. - Governments (in general) praise FDI. MNC as beast - Negative impact on the environment, labor and human rights. - MNCs’ and national state goals are not always compatible - MNCs out-compete local firms. MNCs have immense political power. 51 of the 100 biggest economies in the world are now MNCs. Business is in the driver’s seat, corporations determine the rules of the game and governments have become referees, only enforcing rules. Are MNCs really agents of technological change? Some scholars question the efficiency of MNCs, suggesting that they have become too large and bureaucratic to compete against more nimble and innovative smaller firms that are rapidly gaining advantage in highly competitive global markets. What is the three primary states of mind / attitudes toward the MBC? Ethnocentric (home-country oriented) - Home nationals are the best person to do the job - What works at home must work in the host country Costs: Fewer Innovations, lack of flexibility and responsiveness Benefits: Simple Organization, greater communication and control Polycentric (host-country oriented) - Foreigners are different and hard to understand. Polycentrism often associated with the MNC because...
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...This essay will explore the nature of NAFTA and its effect on regional integration as well as state economies from several perspectives. In 1993, the United States, Canada and Mexico signed the North American Free Trade Agreement to achieve the higher level of regional integration. This NAFTA not only concerns the removal of trade barriers, but also aims to promote the movement of capital. Firstly, this essay will explain the evolution of NAFTA and its successful influence on economic integration. Furthermore, this chapter will provide the criticism on the influence of NAFTA. Secondly, this study will discuss the impact of NAFTA on regional integration, particularly economic integration. Then, this essay will propose the understandings on the effect of NAFTA on members’ economies and businesses from four perspectives, including trade, economic growth, employment and FDI. Main body The Evolution of NAFTA The North American Free Trade Agreement (NAFTA) issued in 1993 aims to removal trade barriers and liberalise economics and business among the United States, Canada and Mexico. Compared with similar FTA economic relationship, such as EU, NAFTA is described as the most implemented FTA (Orme, 1996). Like most FTAs, NAFTA not only effectively coordinates resource and improves competitiveness of countries and corporates, but also promotes the movement of products, services and investment, even financial integration. For instance, Krugman & Hanson (1993) stress that the implementation...
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